CCI imposes penalty for near identical rates and quantity restrictions

Aug 14, 2013

14th August, 2013

Penalty at the rate of 5% of the
average turnover was imposed by the Competition Commission of India (CCI) on various
manufacturers of Polyester Blended Duck Ankle Boot Rubber Sole. Narrow range of
difference in quoted prices, quantity restrictions by all the bidders barring
one and limitations on order quantity per Direct Demanding Officer, were held,
by the Commission, as indicative of pre-determined, collusive and restrictive
bidding pattern or cartel formation by the bidders.

The CCI observed that quotation of
near identical rates (range of price differential in rates was only about 1%)
by the firms though, in itself, is not conclusive and determinative of the
issue, it was difficult to accept the explanation that since raw material and
other costs for all the manufacturers were more or less same, their quoted
prices were also almost same. It was noted that rates of major raw materials of
the product were prone to fluctuations over a period of time. High difference
in the rates of local taxes and different geographical locations, which could
have affected the rate contract rate, but which in the facts of the case did
not, was also considered by the Commission to term the rates as
non-competitive.

Sharing of a platform under the trade
federation, by the opposite parties was also noted to hold violation of
provisions of Section 3(1) read with Sections 3(3)(a) and 3(3)(d) of the
Competition Act. Further, provisions of Section 3(1) read with Sections
3(3)(b), (c) and (d) of the Competition Act were also found to be violated as
nine out of the 11 opposite parties had restricted their quantities to
identical level while six had identical commitments per DDO, without any valid
explanation. [Puja Enterprises – Competition Commission Order dated
6-8-2013 in Ref. Case No. 01 of 2012].